Why Five Below Inc Shares Flew Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of discount retailer Five Below Inc (NASDAQ: FIVE  ) soared 15% today after its quarterly results and outlook impressed Wall Street.

So what: The stock had pulled back sharply in recent months on concerns about slowing growth, but today's Q4 results -- adjusted EPS of $0.47 on a sales jump of 22% -- coupled with upbeat full-year guidance, are quickly easing those worries. In fact, same-store sales during the quarter edged up 0.3%, while net margins expanded 60 basis points, to 11.7%, giving analysts plenty of good vibes about its competitive position going forward.

Now what: Management now sees full-year adjusted EPS of $0.86-$0.89 on revenue of $672 million-$678 million, versus Wall Street's view of $0.87 and $673.4 million, respectively. According to Co-Founder and CEO Thomas Vellios:

We are focused on building a solid infrastructure with our investments in people, technology and distribution. This will position our company to execute at the highest levels while solidifying our foundation for the substantial growth that lies ahead. As importantly, it will ensure that we continue to fulfill our promise to our customers as we scale the business.

More important, with Five Below shares still off more than 20% from their 52-week highs, and sporting a reasonable PEG under 1.5, there seems to be plenty of room left to buy into that bullishness. 

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